The French economy resists as much as

While the international scene darkens, France is good. The Insee has slightly revised upwards its forecast of GDP growth in its latest note de conjoncture publi

The French economy resists as much as

While the international scene darkens, France is good. The Insee has slightly revised upwards its forecast of GDP growth in its latest note de conjoncture published on 19 march. The statistical institute is now targeting an increase of 0.4% of the activity in the first as in the second quarter, when he was advancing in December on 0,3 % for the three months of spring.

To 2019, the statisticians anticipate an annual average growth close to 1.5% in 2018. The Bank of France, on his side, advanced on a rate of 1.4 %, and the government, by the votes of two ministers of Bercy, Gérald Darmanin and Bruno The Mayor, confirmed on Tuesday that he held back also to its own forecast 2019. Until now, it remained fixed on the 1.7 per cent recorded in the finance act of the year. Even at a low 1.4 %, the French growth should exceed that of the euro area, expected around 1 %.

This moderate growth would allow the continuation of the slow movement of decline in unemployment. Insee expects the pace of job creation in the first half of the same ilk (of the order of 85,000) in 2018. The unemployment rate in the whole of France would fall in mid-2019 at 8.7%, versus 8.8 percent at the end of 2018.

drive

Two engines support the French resistance. The country is initially less exposed than its neighbors to the tensions of international trade that have caused the slowdown of the chinese growth and the beginning of the u.s. slowdown. This double shock key on the other hand the full force of the strong exporter to Germany. His "committee of Wise men", a forum for influential economists, is now forecasting growth of 0.8 % in 2019.

The French economy could not long remain insensible to the violence of the shock experienced by its largest trading partner. It should be sooner or later caught up by the global slowdown via the transmission belt German... except if the slowdown of Berlin was only an air hole passenger. A scenario for the moment favoured by the economists in germany who rely on a strong rebound of their economies by 2020.

France is first protected by the (relatively) low opening of its economy to the international.

France is first protected by the (relatively) low opening of its economy to the international. The boost in budget, given by Emmanuel Macron in response to the crisis of the "yellow vests", should then help him to endure these troubled times.

The emergency measures announced in December will boost the purchasing power of households, which had already benefited from the end of the year of the reduction of the housing tax and wage contributions. To mid-2019, the purchasing power of the households (changing that would be obtained if the variable remained until the end of the year at the level of the second quarter) would reach 1.8 per cent. A level already higher than the 1.2% and 1.4% of 2018 and 2017. Among the measures, the exceptional bonus of purchasing power, the tax-exempt up to 1000 euros of income tax and all social security contributions, so-called "premium Macron" has been seen by more than 2 million employees in January.

overall Increase in purchasing power

Insee considers that this overall increase in purchasing power will result in a revival in consumption (+ 0.5% in the first quarter) and a decrease in the savings rate. "The transmission gain of purchasing power of the consumer remains to be confirmed" note, however, Frédéric Tallet, head of the division synthesis in the economy. For experts, the consumption remains, therefore, in 2019 the main subject.

They relativize on the other hand the weight of the movement of the "yellow vests" on the economy. "Even if the movement could have consequences locally severe, its macroeconomic impact in the short term, without context, was more low that its impact policy and the media", says the institute, which remains faithful to its estimate three months ago of an impact on the growth to 2018 of 0.1 percentage point of GDP.

One billion euros paid via the "premium Macron"

The companies have played the game of the exceptional bonus of buying power, announced in December by the president of the Republic. In January, 12 % of them have said in their declaration sociale nominative (DSN) to have paid this premium, fully défiscalisée and exempt from contributions and social contributions, for employees earning up to 3 legal Minimum wage.

For the moment, approximately 200,000 establishments, providing at least a portion of their employees, 40 % of companies with fewer than 50 employees. In total, 2 million employees have taken advantage of this boost for a total amount of one billion euros. The average amount of premiums reached € 450. More than a third of them reached the maximum amount of 1000 euros.

Updated Date: 20 March 2019, 00:00

Kathleen Lees

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